Re: telltale
On the older 55s, the overheat indicator was on the surface of the head. It was a 5/8 head X 1/4 screw that replaced one of the bolts holding the head cover on. Glued to the 5/8 head was a slug of "plastic" with a wire terminal coming out of it. It sounds to me like you have a temperature sender screwed into the top of the head. If it is brass, about an inch and a half tall, with an approximately 1/2 inch hex on it, with a terminal coming out of the top center, it is very likely it is a temperature sender for a gauge. If you unscrew it and it has a brass slug about 1/2 inch long in the bottom, it is definitely a temperature sender. If you do not intend to use it, you could replace it with a small barbed fitting for a pisser. This hole is almost always threaded 1/8 NPT--unless someone dicked it up and re-threaded it.
However, there should be enough meat on the block directly behind the thermostat to drill and tap 1/8 NPT for a fitting--not sure if flywheel ring gear would interfere though. If your engine still has a clear hose running from the block to the thermostat, why not just put a TEE in that hose?
Quite frankly, I don't understand the fuss about indicators. I never see a need for a pisser and never install one on any of my engines. Just because Merc has one doesn't mean it is an absolute necessity. Personally, I would rather look forward at a gauge in the dash than backward for a stream of water. Believe me, if water flow stops and temperature starts to rise, the engine will not be damaged if you are looking at a temp gauge and take action.